Blog Post
Income Tax Appellate Tribunal (ITAT), Ahmedabad in case of Jayshree ben Palsana, Bhavnagar Vs ITO, Ward 1(9), Ahmedabad (Order dated 12.08.2025 in ITA No.1014/Ahd/2025) has allowed the appeal by holding that "the Assessee is eligible for rebate under
section 87A for A.Y. 2024–25 even though the income includes STCG
taxable under section 111A. The AO is directed to allow rebate of
Rs.13,320/- and recompute tax liability accordingly. The demand of
Rs.15,820/- raised in CPC intimation stands deleted."
In the instant case, the Assessee has revised her ITR by opting for new regime under Section 115BAC(1A) applicable from A.Y. 2024–25 as amended by the Finance Act, 2023. The total tax liability computed under the revised return amounted to Rs.13,320/-, arising solely on account of STCG under section 111A, which is chargeable at 15%. The assessee being a resident individual with total income below Rs.7,00,000/-, claimed rebate of Rs.13,320/- under section 87A, as per the first proviso to section 87A inserted by the Finance Act, 2023, which allows a rebate up to Rs.25,000/- to an individual whose income is chargeable under section 115BAC(1A), provided the total income does not exceed the threshold. The return was processed by the Centralised Processing Centre (CPC), Bengaluru, and intimation under section 143(1) was issued on 28.02.2025, whereby the assessee’s claim of rebate under section 87A was disallowed. The tax liability of Rs.13,319/- was upheld, and together with interest under sections 234B and 234C amounting to Rs.1,969/-, and health and education cess of Rs.533/-, a total demand of Rs.15,820/- was raised.
Being aggrieved, the assessee filed an appeal before the CIT(A) wherein submitted that she had expressly opted for taxation under section 115BAC(1A) in the revised return and that her total income being below the threshold of Rs.7,00,000/-, she was squarely eligible for rebate under section 87A. It was submitted that there is no restriction under section 111A or under the proviso to section 87A on claiming rebate against such tax. It was also stated that the restriction under section 112A(6) relates specifically to long term capital gains exceeding Rs.1,00,000/- and does not extend to STCG under section 111A. Therefore, it was argued that, in absence of any statutory exclusion, rebate under section 87A ought to have been allowed even against STCG, provided the total income is below Rs.7 lakhs and the assessee has opted for the default new regime under section 115BAC(1A). The CIT(A) has rejected the appeal and being aggrieved the Assessee approached the ITAT, Ahmedabad who found merit in the claim of the Assessee and allowed the appeal as per 1st paragraph hereinabove and this decision is applicable for A.Y. 2024–25.